XML 26 R17.htm IDEA: XBRL DOCUMENT
v3.22.2

Investment in Unconsolidated Joint Ventures | 6 Months Ended
--- | ---
Jun. 30, 2022
Equity Method Investments and Joint Ventures [Abstract] |
Investment in Unconsolidated Joint Ventures | Investment in Unconsolidated Joint Ventures On November 16, 2018, we formed Victory Abode Apartments, LLC ("VAA"), a joint venture with the Macquarie Group (“Macquarie”). VAA was formed as a result of a sale of the 50% ownership interest in 51 multifamily properties owned by us in exchange for a 50% voting interest / 49% profit participation interest ("Class A interest") in VAA a nd a note payable (“Mezzanine Loan”). Concurrent with the Contributi on, VAA issued Class B interests with a 2% profits participation interest and no voting rights to Daniel J. Moos, our former President and Chief Executive Officer (“Class B Member”). The Class B Member serves as the Manager of VAA. Interest on the Mezzanine loan is limited to cash generated from the properties and matures concurrently with the termination of VAA. Accordingly, we account for our interest in the Mezzanine Loan as additional equity interest and include any interest payments accrued as income from unconsolidated joint ventures. In connection with the formation of VAA, ten of the initial properties were subject to an earn-out provision ("Earn Out") that provided for a remeasurement of value after a two-year period following the completion of construction. Upon the formation of VAA, we recorded an initial liability ("Earn Out Obligation") for the $10,000 advance on the Earn Out that we received from Macquarie. On March 30, 2021, we sold a 50% ownership interest in Overlook at Allensville Phase II, a 144 unit multifamily property in Sevierville, Tennessee to Macquarie for $2,551 resulting in gain on sale of $1,417. Concurrent with the sale, we each contributed our 50% ownership interests in Overlook at Allensville Phase II into VAA. On July 13, 2021, we received the arbitration result of a dispute regarding the measurement of the Earn Out Obligation. Our position and claims were declined, and the position of Macquarie was fully accepted. As a result, we are required to pay approximately $39,600 to Macquarie to satisfy the Earn Out Obligation, and therefore, recorded a charge of $29,600 during the three and six months ended June 30, 2022 (See Note 7 – Real Estate Activity). In accordance with the joint venture operating agreement, the Earn Out Obligation will be paid from our share of future distributions from VAA, which generally occur each six months. At June 30, 2022, we owed $27,147 under the Earn Out Obligation. On July 16, 2022, our $10,178 distribution from VAA was paid directly to Macquarie as an additional reduction of the Earn Out Obligation. On November 17, 2021, we entered into an agreement with Macquarie to pursue a sale of forty-five properties ("Sale Portfolio") owned by VAA in accordance with the provisions of the joint venture agreement. The parties further agreed that we would be able to acquire the remaining seven of the properties (“Holdback Properties”) from VAA at an agreed upon market price. On June 17, 2022, VAA entered into an agreement (“PSA”) to sell Sale Portfolio to two private equity funds (collectively, the “Buyer”) for $1,825,000. In connection with the transaction, we plan to sell Sugar Mill Phase III to the Buyer. The PSA provides for an inspection period in which the Buyer may decrease the number of properties acquired by up to five properties. In connection with the PSA, the Buyer deposited $50,000 into escrow. The sale is expected to be completed in the third quarter of 2022. VAA intends to distribute the net proceeds and the Holdback Properties to the Members immediately following the completion of the sale. We also own a 20% ownership interest in a 20% interest in Gruppa Florentina, LLC ("Milano"), which operates several pizza parlors in Central and Northern California. Milano also has 23 franchised locations, including two operating, under the trade name Angelo & Vito’s Pizzerias. The following is a summary of our investment in unconsolidated joint ventures:
|  | June 30, 2022 |  | December 31, 2021
Assets (1) |  |  |  |
Assets held for sale |  | $ | 1,119,125 |  |  | $ | 1,135,769 |
Real estate |  | 142,481 |  |  | 142,629 |
Other assets |  | 62,686 |  |  | 69,457 |
Total assets |  | $ | 1,324,292 |  |  | $ | 1,347,855 |
Liabilities and Partners' Capital (1) |  |  |  |
Liabilities on assets held for sale |  | $ | 796,076 |  |  | $ | 807,382 |
Mortgage notes payable |  | 86,478 |  |  | 83,955 |
Mezzanine notes payable |  | 238,952 |  |  | 242,942 |
Other liabilities |  | 34,512 |  |  | 25,970 |
Our share of partners' capital |  | 73,623 |  |  | 80,602 |
Outside partner's capital |  | 94,651 |  |  | 107,004 |
Total liabilities and partners' capital |  | $ | 1,324,292 |  |  | $ | 1,347,855 |
Investment in unconsolidated joint ventures |  |  |  |
Our share of partners' capital |  | $ | 73,623 |  |  | $ | 80,602 |
Our share of Mezzanine note payable |  | 123,512 |  |  | 125,306 |
Basis adjustment (2) |  | (137,884) |  |  | (144,287) |
Total investment in unconsolidated joint ventures |  | $ | 59,251 |  |  | $ | 61,621 |
(1) These amounts include the assets of VAA of $1,261,647 and $1,280,867 at June 30, 2022 and December 31, 2021, respectively, and liabilities of VAA of $332,353 and $329,891 at June 30, 2022 and December 31, 2021, respectively. (2) We amortize the difference between the cost of our investments in unconsolidated joint ventures and the book value of our underlying equity into income on a straight-line basis consistent with the lives of the underlying assets. The following is a summary of income from our investments in unconsolidated joint ventures:
| Three Months Ended June 30, |  | Six Months Ended June 30,
| 2022 |  | 2021 |  | 2022 |  | 2021
Revenue (1) |  |  |  |  |  |  |
Rental revenue | $ | 4,032 |  |  | $ | 3,613 |  |  | $ | 7,963 |  |  | $ | 7,135 |
Other revenue | 15,901 |  |  | 15,842 |  |  | 25,702 |  |  | 29,673 |
Total revenue | 19,933 |  |  | 19,455 |  |  | 33,665 |  |  | 36,808 |
Expenses (2) |  |  |  |  |  |  |
Operating expenses | 25,060 |  |  | 16,385 |  |  | 36,531 |  |  | 30,818 |
Depreciation and amortization | 1,134 |  |  | 1,199 |  |  | 2,322 |  |  | 2,398 |
Interest | 6,253 |  |  | 5,999 |  |  | 12,028 |  |  | 11,937 |
Total expenses | 32,447 |  |  | 23,583 |  |  | 50,881 |  |  | 45,153 |
Loss from continuing operations | (12,514) |  |  | (4,128) |  |  | (17,216) |  |  | (8,345) |
Income from discontinued operations | 4,512 |  |  | 686 |  |  | 7,948 |  |  | 3,342 |
Net loss | $ | (8,002) |  |  | $ | (3,442) |  |  | $ | (9,268) |  |  | $ | (5,003) |
Equity in the income in unconsolidated joint ventures | $ | 2,048 |  |  | $ | 4,572 |  |  | $ | 7,242 |  |  | $ | 7,908 |
(1) These amounts include revenue of VAA of $4,268 and $3,802 for the three months ended June 30, 2022 and 2021, respectively, and $8,341 and $7,481 during the six months ended June 30, 2022 and 2021, respectively. (2) These amounts include expenses of VAA of $17,486 and $9,246 for the three months ended June 30, 2022 and 2021, respectively, and $26,665 and $17,997 during the six months ended June 30, 2022 and 2021, respectively.

X
- References No definition available. + Details
Name: | us-gaap_EquityMethodInvestmentsAndJointVenturesAbstract
Namespace Prefix: | us-gaap_
Data Type: | xbrli:stringItemType
Balance Type: | na
Period Type: | duration

X
- Definition The entire disclosure for equity method investments and joint ventures. Equity method investments are investments that give the investor the ability to exercise significant influence over the operating and financial policies of an investee. Joint ventures are entities owned and operated by a small group of businesses as a separate and specific business or project for the mutual benefit of the members of the group. + References Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 323 -URI https://asc.fasb.org/topic&trid=2196965 + Details
Name: | us-gaap_EquityMethodInvestmentsDisclosureTextBlock
Namespace Prefix: | us-gaap_
Data Type: | dtr-types:textBlockItemType
Balance Type: | na
Period Type: | duration